The true meaning of wealth
yesterday i wrote an article about the true meaning of success,many people wrote to me telling me how the articles touched them and some people asked if i can write again maybe talk about the true measure of wealth. some one wrote an interesting email and asked me how much do you make?, then i thought why couldn't he ask me " what is your net worth?". i know very few people will ask such kind of a question.
Then,as seen from above what is the true measure of wealth, is it the income pay you get every week/month/year or is it the net worth of the financial value of everything you own. what do you think?. people who value pay check will measure wealth in terms of the much they can earn and therefore will admire someone who is pay check reads $30million a month and to satisfy the ego they choose immediate gratification, you have a car,you make more money and you get a better car. you have a house,you make more money and you get a bigger house. you have clothes,you make more money and you get nicer clothes. you have holidays,you make more money and you spend more on holidays. of course there are exceptions to this rule....very few. in general as income goes up,expenses almost invariably goes up and that is why income alone will not make you wealth.
But once you understand that your net worth is the ultimate measure of wealth whereby you can easily turn your assets into cash i.e the bonds,real estate,the current value of your business,the value of the residence you are staying on if own it and then subtract everything you owe.
how to build the net worth
building a net worth is a situation whereby you take a blank sheet of paper and title it "Net worth". then you start by creating a simple chart that begins with Zero and ends with whatever your net worth objective will be. remember that your current net worth is as it is today. then update it quarterly. like now when i learn about this, i started with nothing and doubling every quarter meaning i divided the net worth into four areas: my regular income,savings,investments and simplifications.
working income is the money i earned from active work. and in this case my wife was the one who is working and therefore we count the money there and also i had passive income from our current training business which gives us a profit at the end of the month. let us not forget that working income is very important because it can address the other three areas for example the more income you earn the more you can be able to save and invest. unfortunately many people put their focus on the working income out of the four other areas mentioned above. consequently they end up with a low net worth or none.
many of us earn but don't keep any of it. without creating income to fill the funnel and savings to keep it there it is impossible to make an investment. but once you begin a decent savings from your income,then you can make your money grow through investment. and the better you are at investing the faster you can make your money grow and generate a better net worth this will make you realise how important your net worth is and therefore decrease your living expenses as you increase your savings and make more investments. this is what we call simplification. this is why you read of rich people driving old cars,some living in apartments and so on .
by tracking your net worth,you are focusing on it,and because what you focus on expands,your net worth will expand" where attention goes,energy flows".
posted by HESBON at
9:03 PM
yesterday i wrote an article about the true meaning of success,many people wrote to me telling me how the articles touched them and some people asked if i can write again maybe talk about the true measure of wealth. some one wrote an interesting email and asked me how much do you make?, then i thought why couldn't he ask me " what is your net worth?". i know very few people will ask such kind of a question.
Then,as seen from above what is the true measure of wealth, is it the income pay you get every week/month/year or is it the net worth of the financial value of everything you own. what do you think?. people who value pay check will measure wealth in terms of the much they can earn and therefore will admire someone who is pay check reads $30million a month and to satisfy the ego they choose immediate gratification, you have a car,you make more money and you get a better car. you have a house,you make more money and you get a bigger house. you have clothes,you make more money and you get nicer clothes. you have holidays,you make more money and you spend more on holidays. of course there are exceptions to this rule....very few. in general as income goes up,expenses almost invariably goes up and that is why income alone will not make you wealth.
But once you understand that your net worth is the ultimate measure of wealth whereby you can easily turn your assets into cash i.e the bonds,real estate,the current value of your business,the value of the residence you are staying on if own it and then subtract everything you owe.
how to build the net worth
building a net worth is a situation whereby you take a blank sheet of paper and title it "Net worth". then you start by creating a simple chart that begins with Zero and ends with whatever your net worth objective will be. remember that your current net worth is as it is today. then update it quarterly. like now when i learn about this, i started with nothing and doubling every quarter meaning i divided the net worth into four areas: my regular income,savings,investments and simplifications.
working income is the money i earned from active work. and in this case my wife was the one who is working and therefore we count the money there and also i had passive income from our current training business which gives us a profit at the end of the month. let us not forget that working income is very important because it can address the other three areas for example the more income you earn the more you can be able to save and invest. unfortunately many people put their focus on the working income out of the four other areas mentioned above. consequently they end up with a low net worth or none.
many of us earn but don't keep any of it. without creating income to fill the funnel and savings to keep it there it is impossible to make an investment. but once you begin a decent savings from your income,then you can make your money grow through investment. and the better you are at investing the faster you can make your money grow and generate a better net worth this will make you realise how important your net worth is and therefore decrease your living expenses as you increase your savings and make more investments. this is what we call simplification. this is why you read of rich people driving old cars,some living in apartments and so on .
by tracking your net worth,you are focusing on it,and because what you focus on expands,your net worth will expand" where attention goes,energy flows".
<< Home